Report highlights fall in overtime pay

The number of workers getting premium pay for working overtime is falling, with women least likely to get compensated for doing extra hours, according to a new report.

The Time for Time and a half? report by the Resolution Foundation finds that one in 10 workers did paid overtime in Britain in the last year but only a fifth of them got at least a ‘time and a half’ pay premium for those hours.

It says the share of employees doing paid overtime has fallen in recent decades, from 17 per cent in 1997 to 10 per cent last year. The premium that overtime brings workers compared to their normal hourly pay has also shrunk. Just half of all those doing paid overtime enjoyed a premium of at least 10 per cent last year (down from 61 per cent 20 years ago), while just a fifth (20 per cent) of those doing overtime got ‘time and a half’ (down from 25 per cent).

The Foundation says the importance of overtime varies greatly across sectors and occupations. It is much more common in transport (where 17 per cent of employees do paid overtime) and manufacturing (14 per cent) than education (just 4 per cent). The East Midlands has the highest share of employees doing overtime (11 per cent), while London has the lowest (7 per cent).

Men are far more likely to receive a premium from doing paid overtime, says the report. Last year, their typical overtime premium was 23 per cent, while for women it was zero.

The Resolution Foundation says workers in hospitality enjoy the highest typical overtime premium at 34 per cent. In stark contrast, more than half of retail workers doing paid overtime now receive no premium at all. Workers in Scotland enjoyed the highest typical overtime premiums at 19 per cent, followed by the North East (17 per cent), while in London it was zero.

The report backs Matthew Taylor’s intervention in his government-commissioned Review of Modern Working Practices, which proposed a new minimum wage premium for non-guaranteed hours. It also recommends that the Government look at what other countries do by considering the rights of workers further up the pay scale as well.

The Foundation says that the government should trial an overtime pay premium that applies not just to those on the minimum wage but to a wider range of low and middle earners. This, it says, would help discourage firms from using contracts that do not reflect the actual hours individuals work and would provide an income boost to workers who do paid overtime to top up their contracted hours.